One in ten financial advisors are looking to outsource client portfolios to a discretionary fund manager, while one in five who already use DFMs plan to outsource more because of changes brought about by the Retail Distribution Review, according to research from Investec Wealth & Investment Management.

Just under half (47 per cent) of financial advisors currently use DFMs; among those who don’t, 89 per cent want to so that they can delegate the day-to-day investment management process.

Other key reasons cited by advisors for the change of approach include include wanting access to an investment professional (82 per cent) and reducing the “growing administrative burden” (73 per cent).  

According to the findings, advisors rate quality of service, cost, transparency of charges and investment performance as the most important criteria when choosing a DFM for the first time.

Meanwhile, 34 per cent of advisors plan to increase the number of client portfolios held on platforms. Currently, advisors outsource 11 per cent of their client investments to DFMs via a platform and the average number of platforms used is three. 

“The research shows that RDR has been a tipping point in the use of DFMs among advisors as the challenges of operating successfully in a new environment bring the benefits into sharp relief,” said Mark Stevens, head of intermediary services at Investec.